Taxi insurance is a form of vehicle coverage designed to protect you, your taxi and other road users from the additional risks of driving for professional purposes. Like other vehicle insurances, it comes in three levels – third party only (TPO), third party, fire and theft (TPFT) and comprehensive.
While it may not be immediately obvious why you need a different type of insurance to protect a taxi compared to a regular vehicle, taxis are exposed to several unique risks that other drivers are not. According to NimbleFins, taxi insurance quotes are less cheap than car insurance because drivers often stop at awkward roadside locations, could spend long hours behind the wheel in a single day and rack up considerably more mileage than the average driver. All of these factors result in the chances of a taxi driver being involved in an accident being higher than most.
TPO cover will cover the compensation for damages other road users incur as a result of an accident you’re at fault for and is the minimum level of insurance required in the UK. TPFT includes this cover, but will additionally cover your vehicle in the event it is stolen or damaged in a fire. Comprehensive is the highest level, covering both your vehicle and others in the event of an accident, and despite what you might assume, is often the cheapest level of cover (insurers assume safer drivers will opt for higher cover so may price comprehensive policies more favourably).
Taxi insurance can be expensive, but you must have a policy sorted before you accept any passengers. Your local licensing authority will require proof of insurance before issuing a license, but it’s your job to keep on top of your annual renewals, and if you’re caught driving without valid insurance punishments can be severe, including fines, penalty points and even losing your licenses altogether.
Taxi insurance is usually referred to as either public hire or private hire. The differences are subtle, but it is important to make sure you know which one you need. Private hire taxi insurance will only cover you for customers who have prebooked, perhaps through an app or over the phone. This means you aren’t covered to pick up customers roadside, perhaps one who has hailed you down – that’s where public hire taxi insurance steps in.
Public hire taxi insurance includes the same coverages as private hire but additionally protects you against the risks of picking up passengers from the roadside or busy taxi ranks (i.e., customers who have not prebooked). You may have to park in awkward locations and help with luggage next to busy roads, and as such you require a different (and more encompassing) insurance policy.
Public hire will be more expensive, but as mentioned above, having the correct license is an integral part of getting (and keeping!) your taxi license, so well worth the additional cost if you will be picking up passengers who haven’t booked ahead of time.
Taxi insurance cover
Taxi insurance will cover you for the same things as your traditional vehicle insurance. Its differences are a result of the unique challenges taxi drivers can face at work that other drivers are rarely exposed to.
Cab drivers spend more hours on the road (and drive longer distances) than the average UK driver. You’ll often navigate roads you’re not familiar with and may also have time pressure to reach a certain destination on time to meet tight drop-off times. The combination of all of these creates a situation considerably more risky than the one an average driver faces, and so your insurance policy has to account for that.
Yes, that does mean your taxi insurance will be more expensive than regular vehicle insurance, but it shouldn’t break the bank, provided you’re smart about buying, compare a few different quotes and buy well in advance.
Why do I need taxi insurance?
You need taxi insurance to help protect yourself and other road users from the risks of driving a taxi. Taxis aren’t like most other vehicles on the road – taxi drivers regularly spend long, continuous hours behind the wheel, driving to destinations they’ve never been to before and operating late into the night (and into the early hours of the morning).
Apart from the fact that it’s illegal to drive in the UK without the correct insurance, you’ll also need proof of a valid policy as part of the process to get your operating license from the local licensing authority – you won’t be allowed to work without one, and could face criminal prosecution if you do.
Do I need public or private hire taxi insurance?
While the differences are subtle, it’s important to make sure you know which one you need and which one you’re signing up for. Private hire is designed for taxi drivers who only accept passengers by pre-booking (perhaps over a phone/radio or through a mobile app like Uber). This means you will never, under any circumstance, collect a passenger who hasn’t pre-booked their cab – for example, by hailing you down at the side of the road.
This is what public hire is designed for. Public hire taxi insurance covers you for both pre-booking and customers who might wave you down as you pass by. This can be a risky business, requiring you to quickly make a stop next to a busy road, so public hire is more expensive but important to get correct if you intend to pick up customers as you go.